Rich or wealthy?
Maybe you think these are two different words for the same thing, but they aren’t.
You can almost hear it in the word. One is like a rush. It’s material. The other is more solid and has more of a psychological quality to it.
So what exactly is the difference? Here are seven…
1. Rich People Have a Lot of Money
You can be a top lawyer or a skilled surgeon who gets a high monthly income but at the same time builds up debt and spends more money than comes in.
A person can easily be rich, but close to broke.
In the media, we talk about rich pop stars, but many of them go bankrupt when they stop having success and when their income drops.
2. Wealthy People Have a Lot of Assets
Being wealthy means building wealth that is a lot more than just cool cash.
You’re not wealthy if you risk going bankrupt because of your lifestyle.
Wealthy people possess assets that work for them. That may be stocks and shares, but it can also be rental properties or a business.
3. Wealthy People May Earn a Lot Less Than Rich People
Perhaps it will surprise you that Warren Buffett – who is one of the wealthiest men in the world – only receives an annual salary of 100,000 USD.
This is actually just about what a skilled business journalist earns.
Being wealthy doesn’t mean you’re swimming in cash every month.
Wealthy is more about building, whereas rich is much more about the cash flow and the lifestyle.
If a person can live off the return on their investments, that person is pretty wealthy.
4. Wealthy People Have More Freedom
A wealthy person has a great deal of freedom to choose the lifestyle they want.
A wealthy person is financially independent – or close to being so. Therefore, they are not forced to stay in a job where they are not thriving. They can live where they want and pretty much do what they want.
A rich person – such as a supermodel, a brain surgeon, or a stockbroker on Wall Street – can easily be tied to a job.
5. Rich People Own a Lot of Status Symbols
When we think of the typical rich person, there are quite a few things that go along with that image and lifestyle.
Think a Porsche, mansions, a private jet, or a yacht.
To be considered rich, you need to look rich. It’s about living an expensive lifestyle.
That’s why rich people often own many things that pull money away from their finances.
Money may pour out of their pockets faster than it comes in… which is a sure path to insolvency down the road.
6. Wealthy People Have More Stability
Wealthy people have peace of mind and can therefore sleep peacefully at night, even when going through a turbulent moment.
Because they don’t have to worry about the state of their finances.
No one can threaten their lifestyle by firing them or cancelling a contract. They remain solid even if the immediate things around them change.
A person with a high income but an expensive lifestyle leads a more unstable and unpredictable life.
7. Wealthy People Have More Quality Time
Time is the scarcest resource that we have. We only have so much time no matter how much money we have.
Rich people may be forced to stay in their day jobs, but wealthy people can choose whether to keep their jobs.
Therefore, there is a higher probability that wealthy people have more quality time in their lives.
There is a greater likelihood that they’ll get more travel, experiences, and time with people they love.
If they have a job, it’s an active decision they made and probably something they choose because it brings them joy or a sense of fulfilment.
Perhaps they’ve created their own job by establishing a business or a freelance practice. Maybe they’ve chosen to turn a hobby into a full-time job.
How Do You Become Wealthier?
If you want to be rich, you have to make more money. It requires a pay raise or a new job. It’s often dependent on someone else’s decision.
The good news is, getting wealthy is actually more within your control than getting rich is.
You really just have to do three things:
1. Cut back on your expenses and make sure you spend less money than you earn.
2. Put the savings in assets, such as equities.
3. Repeat every month.
You can learn more about investing in the best type of assets, namely stocks, in my free e-book here.